NY blackouts: a forgotten solution is nuclear power

ByMurray WeidenbaumAugust 19, 1999

As a native New Yorker, it was sad for me to read about the effects of the electricity blackout in the New York area last month, and especially to learn of the damage to important medical research. The most serious concern, however, is the continuing likelihood that blackouts and less dramatic power shortages will recur.

Under the circumstances, it is appropriate to see what lessons can be learned from this unfortunate experience. Because electric utilities are a highly regulated industry (subject to a variety of federal, state, and local rulemaking authorities), one place to start is to examine the role of government regulation. In this instance, there seems to be a case of collective forgetfulness.

In all of the extensive coverage of the recent New York blackout, I have seen no reference to the abandoned Shoreham nuclear power plant and why it is not available to supply electricity in this time of real need. If Shoreham were operating today, the chances are very good that the New York area would not now be facing the prospect of further electricity shortages.

It doesn't take an expert in ancient history to recall that this $6 billion investment by the Long Island Lighting Company (LILCO) in enlarging the electricity supply of the area was complete when it was dismantled in 1994. After a series of cost overruns and other problems (LILCO was not a candidate for any Business Hall of Fame), the Shoreham project had attained the necessary licenses prior to the adverse decision of the governor at the time, Mario Cuomo.

Indeed, the only requirement that Shoreham didn't meet was to get the governor to approve the evacuation plan which would be needed in the remote contingency that a serious emergency would occur. Governor Cuomo's adverse decision on Shoreham was not based on any new developments that occurred after the other approvals were granted. Rather, it was an arbitrary, politically correct course of action. Cuomo reportedly ordered state officials not to approve any LILCO evacuation plan. The result was the dismantling of this costly new facility.

Of course, nuclear power is a controversial issue in some parts of the United States. But that is not necessarily the case around the country. For example, the Calloway nuclear power plant is owned and operated in Missouri by the Union Electric unit of Ameren-UE. Most Americans have never heard of Calloway. That is because it is a reliable and trouble-free provider of electricity. No government official has tried to prevent its operation.

Despite this and other examples of the successful use of nuclear power, it would have been understandable if, at the beginning of the regulatory process, New York State had taken action to prevent the construction of a nuclear-powered generating plant. If such negative action had been taken expeditiously, the erstwhile LILCO would have had the opportunity to invest the same funds in an alternate conventionally powered electricity generating and distribution facility. Belatedly, this is what the successor Long Island Power Authority is now thinking about doing.

There is something fundamentally wrong with a regulatory process that permits an important and expensive project to be killed after all the regulatory approvals have been obtained and the investment has already been made. There must be a better way.

We could learn from the Japanese experience. Ironically, the only nation that has suffered direct nuclear attacks depends on atomic energy to a greater degree than almost any other country.

However, in accord with their tradition of obtaining widespread agreement before undertaking a major activity, the Japanese typically involve representatives of all the affected groups prior to beginning construction. But once construction is under way, there is little opportunity for either government officials or private interest groups to repeatedly reopen the issues that were settled at the outset.

New York - and other states - can do worse than undertaking fundamental regulatory reform under the banner, "Remember Shoreham."

*Murray Weidenbaum is chairman of the Center for the Study of American Business at Washington University in St. Louis.